Author Ralph Higgs did not mince words with WKU students when discussing the state of the U.S. government.
Higgs, who is a senior fellow in political economy at the Independent Institute, came to discuss the growth of the government through WKU’s BB&T Center for the Study of Capitalism.
After criticizing government expansion in both spending and encroachment on American citizen’s civil rights, by the end of the presentation Higgs said he had lost pride in America.
“We don’t have what it takes,” Higgs said of the ability to address the problems the U.S. is facing.
Throughout the lecture, Higgs described the steady growth of the federal government and said that the gradual nature of its growth is what made it palatable to the public.
“If you were to go back to our ancestors and impose on them all of the taxes and regulations, they would take to the streets if you dump that on them all at once,” Higgs said.
The process that created the current situation began about a century ago. According to Higgs, the government will utilize crises, such as war, to expand the size of government.
“It retrenches after the crisis, but not all the way to its pre-crisis level,” Higgs said.
Higgs called this, the “ratchet effect.” Essentially, during a crisis government expansion will spike. After the crisis it will take much more time for it to fall back to previous levels, if ever.
One of the historic “myths” Higgs wanted to dispel was that Hoover was a “do-nothing President.”
“Hoover did a number of things that were unprecedented to fend off the depression,” Higgs said.
Overall, Higgs did not have many kind words for any other U.S. President either. He said he thought F.D.R.’s brain trust was deeply misguided and made the Great Depression worse.
“The government is full of intelligent people,” Higgs said. “That doesn’t mean they know what the hell they are doing.”
Higgs provided the example of National Industrial Recover Act, which was part of the New Deal, which Higgs said helped form “cartel in each industry.”
“It suppressed competition among them so that they would be able to reduce the amount they sold and get a higher price for their product,” Higgs said.
This was the opposite approach of what should have been taken, which was to allow prices to fall, Higgs said.
The reason economists are sometimes ineffective is because they do not always have a connection with “reality.”
“A lot of experts live sealed off from the world,” Higgs said.
Besides its New Deal programs, the Roosevelt administration also had to deal with World War II, which Higgs said also helped to grow the size of government.
“Half of all spending of the GDP was government spending,” he said.
The reason the economy recovered so quickly after WWII was because the government backed out of the economy, Higgs said.
“The success of the post war economy was the relinquishment of government control,” he said.
In the modern era, Higgs criticized the Bush and Obama administrations for rapidly expanding the size of the government as well.
In particular under the Bush administration, Higgs said there were dramatic expansions in both spending on the war on terror as well as widespread infringements of civil liberties.
“After 2001 the government started to spend more the government started to seize more powers like the U.S. PATRIOT Act and the nationalization of airport security,” Higgs said.
Beyond the terror-related expansion of the government, the economic crisis of 2007 and 2008 also expanded the government into the housing market, which is what Higgs said created the crisis in the first place.
“The government is now managing that lending in such a way that it is recreating the conditions that created the crisis of 2008,” Higgs said.
When asked how to reverse the size of government, Higgs said that an immediate crisis in government debt is the only effective way to mobilize politicians.
“The political attention to the growth of government at best is wholly disproportionate to the threats posed by the growth of government,” Higgs said. “At worst it is a total disregard of the menace that is the growth of government.”
He compared the situation to the transition away from communism in the Soviet Union.
“It was a very messy transition from the old communist planning system to something more oriented free markets,” Higgs said.
The difficult in reducing spending is because politicians utilize increased payment transfers and benefits to essentially “purchase” votes, Higgs said.
“Politicians purchased votes by increasing social security benefits to much higher levels than they were before,” Higgs said.
However, he said that many federal programs will inevitably be cut as the government becomes unable to afford them.
“In another 20 years Medicare will be more than the whole federal government can pay,” Higgs said.
Ultimately, Higgs said he was disappointed with the American public’s willingness to allow the government to grow to the size it is today.
“It takes abuse, it takes injustice, it takes every form of misdirected criminal action from its rulers,” Higgs said.